Financial devolution in Scotland: the journey so far

Scotland is on a complex and fast-paced journey of devolution. This brings new opportunities and risks for public finances and how they’re managed in a world of growing demand and challenges for public services.

As the independent public spending watchdog, Audit Scotland’s role is to help the Auditor General and the Accounts Commission ensure that public funds are well spent and provide value for money.

We are committed to supporting the Scottish Parliament and the public to understand how devolution is changing the landscape for public finances, and how well public bodies are taking on the significant responsibility of managing Scotland’s increasing financial powers. This page sets out our past and future work in this important area.

Exhibits

Our reports feature several exhibits that visualise complex data and processes in an accessible and informative way. See the examples below or click on our reports to find more.

First exhibit - Funding sources and spending

Second exhibit - How the funding for the Scottish Budget is determined. The Fiscal Framework sets out how the Scottish Budget is funded. As each of the new financial powers is implemented, a further adjustment is made to the block grant, known as a block grant adjustment (BGA). For more information please see part 1 of our briefing paper Scotland’s new financial powers: Operation of the Fiscal Framework.

Third exhibit - The relationship between Scottish and the rest of the UK performance on the budget. The Scottish budget is now more closely linked to Scotland’s economic performance relative to the rest of the UK. The Fiscal Framework is intended to incentivise the Scottish Government to increase economic growth. Where the Scottish economy is performing relatively well, tax revenues will be higher and pressures on spending will ease. Where it performs relatively less well the effect will be to squeeze the budget, reducing available funding and increasing spending demands. For more information please see part 3 of our briefing paper Scotland’s new financial powers: Operation of the Fiscal Framework.

Fourth exhibit - Scenarios of possible changes to the Scottish Budget from tax policy. The way that block grant adjustments for both taxes and social security operate means that different tax and spending policy choices in Scotland compared to the rest of the UK directly affect the Scottish budget. Maintaining the status quo between Scotland and the rest of the UK through the Fiscal Framework now means matching UK tax and social security policy. Policy divergence will occur where either the UK Government or the Scottish Government choose a different tax policy.For more information please see part 3 of our briefing paper Scotland’s new financial powers: Operation of the Fiscal Framework.

Fifth exhibit - Timeline of social security powers being devolved through the Scotland Act 2016